Posted
by
Soulskill
on Friday January 10, 2014 @10:15AM
from the currency-with-an-option-for-hostile-takeover dept.

An anonymous reader writes "Bitcoin transactions are confirmed by performing complex calculations, also known as 'mining.' If a single mining pool gains 51% of the overall computational power in the network, various forms of transaction manipulation become possible. Only a few years into Bitcoin's existence, this existential threat appears to be at hand, with Bitcoin mining pool ghash.io approaching 51% of mining power. ghash.io has now assured the Bitcoin community in a press release (PDF): 'GHash.IO does not have any intentions to execute a 51% attack, as it will do serious damage to the Bitcoin community, of which we are a part.' But can a network relying on such assurances survive in the long run?"

This has nothing to do with the market in bitcoin speculation. It's about the fact that a majority of the cryptographic network (which is what bitcoin miners are) has to concur for a transaction (sending money to someone else) to be considered valid. When you control 51% of the computing power, you can start faking transactions.

Sure except for the fact that I don't believe this is actually an accurate description of the 'control' a mining pool actually has. Generally people go get their client and join the pool. This sort of control would require that everyone (or most anyway) who joins the pool uses a specialized client designed specifically to ignore the rules of bitcoin and work on a fraudulent block chain.

It can't be done by just pooling together people running the normal clients that everyone else uses. Doing it via a pool like this would either mean tricking lots of people, some of whom are technically saavy and have a vested interest in bitcoin prices not being destroyes so the pool owners can cheat...or by having everybody be in on it... either way making it unlikely they would get away with it unnoticed.